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Thursday, August 23, 2007

Commentary: Corruption surfaces in Cambodia housing fiasco

HONG KONG, Aug. 22
Column: Rule by Fear
On July 31, the Cambodian government sent a delegation of officials, ten excavators and over 100 workers under the protection of armed policemen to reclaim a site that once included Lake Kob Srov। Long Chhin (Cambodia) Investment Ltd. had filled in the lake in order to build a luxurious housing estate, called Long Chhin Resorts, 12 kilometers northwest of Phnom Penh.

The government moved to reclaim the lake site following the expiry of a deadline for the company to dismantle its construction there. The government has claimed that the filling-in of that lake was illegal and that it needed to reclaim the site as the construction work on the estate would block the water flow in the area and cause floods in the capital, Phnom Penh.

In the presence of the government delegation and the company's representative, the excavators and workers tore down and demolished all construction on the estate, turning it into rubble in three days. The demolished structures included all the brick walls around the estate, all entrance porches, seven two-story apartment blocks, 21 finished villas, eight villas that were still under construction, three guesthouses, a karaoke hall, 10 leisure kiosks, a warehouse, an office building and other amenities.

A number of Cambodians have lost all their investments in the estate, having already bought villas and apartments from the company or made deposits on them. Suppliers of construction materials have also lost the money that the company owed them. The total losses suffered by house buyers and the company's creditors are estimated to amount to around US$20 million -- a huge sum in a poverty-ridden country. Thirty-seven house buyers and creditors have now filed separate suits against the company to get their money back.

The government has promised to help repay them if the company's assets are insufficient. The chance of them getting their money back from the company is very slim, as the company's now frozen bank account has a balance of only US$4,000 in credit. The owner of the company, Zhou Shi Min, a mainland Chinese man, has "disappeared" and is believed to have fled Cambodia. Not much can be recovered from the rubble that is left on the estate. It is highly unlikely that the government, which is cash-strapped and corrupt, will ever live up to its promises and repay those who have lost money.

The house buyers and the company's creditors will have to pay for the corruption in high places that allowed Long Chhin (Cambodia) Investment Ltd. to do business in housing development in Cambodia, dupe them into buying its houses and supplying construction materials on credit, and also to defy the government's order to dismantle the estate.

In a brochure published in 2005 to attract buyers for its houses and apartments, the company claimed it had purchased the land in that area in 1993, that it had received authorization for development in the area from Prime Minister Hun Sen and the Cambodia Development Council in 2004, and that Zhu Shi Min had relations with Cambodian and Chinese leaders. As proof of these relations and the support they entailed, the brochure showed photos of Zhu shaking hands with or standing beside Cambodian leaders, as well as autographs provided by Cambodian and Chinese leaders.

The government has acknowledged that it had given authorization "in principle" for housing development on "28 hectares" in the area, "subject to a set of conditions" including the need for the company to get permission from relevant departments and for it not to affect the water flow in the area. However, the government has accused the company of filling in "hundreds of hectares" of the lake.

Just days before the demolition took place, the government sacked the governor and two deputy governors of Kandal province, as well as the governors of the two districts in which the lake is located, for their involvement in the Long Chhin Resorts project. Two weeks before the demolition, one of these district governors, Tep Sothy, was quoted by a newspaper as saying that Long Chhin Resorts "had followed the law" and had permission from the government for its construction project.

The government officials who had authorized and supported the development at the lake site, whether in principle or by giving definitive approval to the project, have violated the country's Constitution and land law, which classify lakes as being inalienable public property. Any such violation is punishable by a fine between 5 and 50 million riels (between around US$1,250 and US$12,500) and/or one to five years imprisonment. Those responsible should be prosecuted and made to repay the house buyers and creditors.

However, Zhu Shi Min's disappearance has rendered difficult any public action against the government officials in question. Zhu is the cases' key witness and is also charged with the crimes of fraud and the destruction of public property. It is quite legitimate to suspect that Zhu may have been deliberately helped to "disappear" by those seeking to avoid legal action being taken against them.


(Lao Mong Hay is currently a senior researcher at the Asian Human Rights Commission in Hong Kong. He was previously the director of the Khmer Institute of Democracy in Phnom Penh, Cambodia, and a visiting professor at the University of Toronto in 2003. In 1997, he received an award from Human Rights Watch and the Nansen Medal in 2000 from the United Nations High Commissioner for Refugees.)

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